Lower minimum income rate…
If you hold an account-based pension or similar product, you need to withdraw a certain amount each financial year – this is called your minimum income amount. The Government reduced this amount by 50% during the last year.
The lower rate has now been extended until 30 June 2022 so Australian retirees can continue to receive a lower income if they wish. It minimises the need to sell down assets in markets that remain depressed.
Here are the minimum pension drawdown rates for 2021-22.
| Age | Default minimum income (%) | Reduced minimum income for 2021-22 (%) |
| Under 65 | 4 | 2 |
| 65-74 | 5 | 2.5 |
| 75-79 | 6 | 3 |
| 80-84 | 7 | 3.5 |
| 85-89 | 9 | 4.5 |
| 90-94 | 11 | 5.5 |
| 95 or more | 14 | 7 |
The lower rates are not compulsory, so you can choose to receive a higher payment if you prefer. But if you’ve chosen to receive the minimum income amount, this will continue to apply.
It’s a good idea to check your current pension payment arrangement before making any changes. If you’re an AMP client, you can do this by logging into My AMP
If you’d like to change your pension payment amount, frequency or date, you can:
- speak to your financial adviser
- complete the alteration request form
- get in touch with us.
..and deeming rates
Meanwhile, the Government has retained lower deeming rates for 2021-22, while increasing the asset thresholds at which they apply1. These lower deeming rates were brought in during 2020 to help Australian retirees through the COVID-19 crisis.
| Status | Thresholds 2020-21 | Thresholds 2021-22 | Deeming rates |
|---|---|---|---|
| Single | First $51,800 | First $53,600 | 0.25% |
| Balance over $51,800 | Balance over $53,600 | 2.25% | |
| In a couple, at least one pension | First $86,200 | First $89,000 | 0.25% |
| Balance over $86,200 | Balance over $89,000 | 2.25% | |
| In a couple, no pension | First $43,100 | First $44,500 | 0.25% |
| Balance over $43,100 | Balance over $44,500 | 2.25% |
Deeming rates apply as a way to check if you’re eligible for the age pension and other entitlements. Deeming assumes you earn a certain income from your investments, regardless of how much you actually earn. It means any Government payments you receive remain steady, rather than fluctuating depending on how your investments are performing.
Deeming can provide an incentive to invest, as any extra amount you earn above the deeming rate doesn’t count as income.
Next steps
If you’re looking to make the most of your retirement income, here are plenty more tips about how to retire right.
1.https://www.servicesaustralia.gov.au/individuals/topics/deeming/29656
Important information
This information is provided by AWM Services Pty Ltd (ABN 15 139 353 496), is general in nature only and hasn’t taken your circumstances into account. Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant product disclosure statement or terms and conditions available from AMP at amp.com.au or by calling 131 267.
All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does not guarantee that it
is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability for any resulting loss or damage of the reader or any other person.
Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive relating to products and services provided to you. All information on this website is subject to change without notice. AWM Services is a part of AMP group.
Original Author: Produced by AMP_AU and published on 29/07/2021 Source